tv Nightly Business Report PBS March 2, 2012 7:00pm-7:30pm EST
>> susie: wall street gives yelp's stock offering a five- star review, shares of the company that offers online reviews of everything from restaurants to auto-mechanics jumped 64%. >> i'm erika miller at the new york stock exchange. the market has gone up virtually in a straight line this year, so why aren't individual investors rushing back into stocks? i'll have the story. >> tom: and citigroup's chairman of the board steps down. dick parsons retires after 16 years on the board. it's "nightly business report" for friday, march 2. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
captioning sponsored by wpbt >> susie: good evening, everyone. more red than green on wall street today. tom, it was a day of profit- taking after the market's recent run-up. >> tom: the s&p and nasdaq still posted gains for the week, susie, but not the dow, thanks to today's small drop. by the closing bell, the dow was off about three-points. the nasdaq lost nearly 13 and the s&p slipped four. >> susie: aside from today's minor losses, the stock market has been on a steady climb up: the s&p 500 has rallied more than 9% this year. but as erika miller reports,
trading volume has been very light, suggesting many investors are missing out on the gains. >> reporter: even as stocks trade close to their highest prices in two years, many individual investors are still wary. mutual funds are the most common investment for individual investors and looking at the latest data. $2 billion was taken out of u.s. stock mutual funds in january. at the same time, bond funds gained nearly $28 billion. what that shows is that the market rally has been based on light trading volume, often a troubling sign. but analyst david levkowitz says volume is just one of many factors investors should consider: >> volume is one of them, but looking at trends in earnings, we're still going to have earnings growing this year. so that is a positive. dividends are going to grow this year-- faster than earnings. >> reporter: here at the new york stock exchange, many professional traders are feeling optimistic as the dow climbs to levels last seen in 2008. so why aren't ordinary investors
flocking back into stocks? jonathan corpina warns there's no simple answer. he believes some investors are simply waiting for a better entry point. >> one of the reasons investors haven't gone into the markets so heavily thus far is that the market has been pretty much one direction since december. when that happens sometimes investors feel like they've missed the opportunity. >> reporter: other investors may be worried about the weak job market and fragile economy, so they're saving more and investing less. the surge in prices at the pump may also be having an impact, by forcing some people to dip into long term savings to pay for extra household expenses. but there's no denying many investors are reluctant to buys stocks, after getting burned by the financial crisis. >> there are investors who are saying i've gotten so hurt in the past, it is going to take a lot more for me to get back into this market. >> reporter: it's understandable that many investors want to play it safe. but historically, individual
investors tend to be poor market timers-- cashing out near the bottom and buying back near the peak. erika miller, "nightly business report," new york. >> tom: still ahead, tonight's market monitor guest is going for guns and precious metals.. ut he also sees new market highs in the fall. mark leibovit of vrtrader.com joins us. >> susie: here at the big board, a lot of enthusiasm today for yelp. executives of the consumer review website rang the opening bell, as yelp sold shares to the public for the first time. the stock skyrocketed 64%. closing at $24.58, well above its offering price of $15. our next guest says the u.s. economy needs more success stories like yelp? but he says there's been a stunning decline in companies going public and this hurts american competitiveness. he's jack markell governor of delaware. >> there's a direct linkage
between ipos and jobs. and one of the most important things for creation of jobs for a company is after they go public. so a lot of companies are deciding that because it's so cumbersome to go public, particularly when you're smaller, it has become so expensive, that instead of going public, instead of doing an ipo, they're going to sell. i can understand from the owner's perspective why to choose that, but from the perspective of the economy it's not a good thing. >> susie: governor markell what is the biggest obstacle from going public? >> over 10 or 15 years there have been a number of mtion changes that made it burdensome and expensive for companys to go public. the beftd known is the sarbanes oxley. >> it's important to protect the public, but when smaller companies have to start complying with all of these rules -- i think what we will then see is more companies choosing to go public, and
then creating >> susie: so what specifically would you propose to turn this situation around? >> my particular focus has to do with the initial public offerings, and making it simpler and less expensive for emerging companies to go public in this country. and separate from the ipo issue, but still important is has to do with the corporate tax environment. the president has made a good start with respect to his proposal to reduce corporate taxes. but the fact is, we're seeing -- and i've had a lot of conversations with ceos around the country and different industries. we need to make sure we're prepareed to compete with the taxs in some of the other countries so that companies don't move. that's another big issue. all of this is wrapped in together in terms of how do we make our country more competitive. >> susie: many people sympathize with your argument about taxs and regulations, but say the real problem is other markets around the world
have become much more sophisticateed and they're a viable option to the u.s. so what's the way around that? >> first of all, they're right. we have to figure out we can't stand still or rest on our laurels. what do we have to do to become more viable and leap ahead? we've always got to be saying how do we stack up competitive with respect to education, with respect to quality of life, with respect to taxes, with respect to higher education. there's a whole range of issues here. and what we've got to do is say, we don't rule everything anymore. the world does not resolve around us. we've got to understand where we stack up in the global competitive environment and figure out where to get better. >> susie: sdpt other issue is some people say i wanted to make my company public, but this is not a good environment to go public. uncertainty in the european economy, and the u.s. economy, it's a volatile stock market.
what are your thoughts on that? >> i disagree with the premise. in the sense that they've done extraordniarily well over the last many months. it may not be as good as it was at the boom, but it's not such a bad time if we can make it easier. if we can make it less cumbersome, if we can make it less expensive. so some of the broader issues, we may not be able to control, but there is things we can control. >> susie: governor markell, thank you for your time. >> thank you. my pleasure. >> tom: the governor of delaware is just one of the critics of some of the financial reforms put in place since the credit crunch four years ago. the top money man of the federal government is defending the new rules saying critics suffer from amnesia. >> reporter: timothy geithner was the head of the federal reserve bank of new york in 2008 when the credit crunch began taking hold. now he's the treasury secretary and is fending off criticism of the obama administrations legislative answer to the crisis: the dodd-frank financial reform law. geithner writes in the "wall
street journal," quote, "these reforms are not perfect, and they will not prevent all future financial crises." end quote. but independent banking analyst kenneth thomas thinks geithner ignores his own actions during the 2008 crisis. >> with all due respect, secretary geithner has amnesia because the biggest reason why the crisis was so severe was because he at the federal reserve bank of new york and chairman bernanke and especially treasury secretary paulson at the time let lehman fail. >> reporter: secretary geithner has previously called 2012 a key year for the reforms as dozens of the rules will be written. for instance, the securities and exchange commission is working on the so-called volker rule. that would ban banks from using their own money to trade derivatives. the commodity futures trading commission is coming up with rules governing over the counter trading for certain financial derivatives. >> tom: geithner has come under fire before for not being more pro-active in his previous role with the new york federal reserve bank overseeing the big financial institutions that wound up in trouble.
>> susie: the man who helped guide citigroup out of the financial crisis is retiring: we're talking about chairman dick parsons. he's been on the citi board for 16 years and became chairman in 2009, that was just after the bank took $45 billion in federal bailouts. joining us now is a top banking analysts who has been calling for the ouster of dick parsons. mike mayo is also author of the book "exile on wall street." >> fwhies to have you with us. >> thanks for having me. >> susie: why have you been so critical of dick parsons as the chairman of citi? >> he's the longest serving member of the board of citigroup and encompassed three ceos. the burst in the tech cumb. he was the head in the decade
when citigroup members got paid more than anybody else even when they had the worst performance, and even as chairman of the board, citigroup still didn't escape a lot of legal and regulatory problems. >> now that there's a change, is this a positive for investors. reportedly mike o'neill will be the chairman >> this is a significant milestone? citigroup's corporate history. and mike o'neill is a good kick-off from parsons. he was head of the bank of hawaii, and when he took over the bank of hawaii he said i'm taking over the world's smallest money center bank, and now head of one of the world's largest money center banks. in hawaii he was chief financial officer of the old bank of america in the 90s. he helps these companies shrink. he tried to make them not all things to all people. and that's what citigroup needs to do. there's $2 trillion in size,
and there's a $1 trillion bag inside of city group. >> susie: how will it pay off for investors? the sfok is way down from a year ago, but has been make making a move up and close to $34 a share. what do you think about the future of city've citi stock for investors. >> citigroup has many problems, and i outlined this in a report a week ago. this is a positive first step. the question is will mike o'neill be a figurehead or hands on. will he only talk to the board or will investors get to hear what he has to say? we need to see better expense control at citigroup, and see that they're not going to overly invest. and see ta they're actually changing the dna of the company so that they're truly managed for shareholders, and shareholders are not treated as second class citizens. although, this is an enormous
job for mike o'neill, but it's a step in the right direction. >> susie: in less than 20 sblds, whaeconds what is your t being on track? >> partly on track, and partly not on track. last year, city group core expenses were $3 billion, and the revenues went down $8 billion. that's a bad formula in any industry you're in. ironically after a few years, i'd say the jury is out. but in the case of dick parsons, the jury had long given a verdict. >> susie: we have to leave it there. any disclosures to make? do you own citi stock? >> i do not. >> susie: thanks for coming on the program. we've been speaking with mike mayo, author of exile on wallviated to wall street.
>> tom: little bit of selling pressure moving into the weekend. let's get you updated. the major stock indices finished with small losses after not showing much conviction today. and we finished out the week pretty much where we were one week ago. the dow industrials traded higher on two of the five sessions for a fractional loss this week. the nasdaq was up three of the five session with a gain of four-tenths of a percent. and the s&p 500 finished higher by three-tenths of a percent
compared to a week ago. for the s&p 500 and the nasdaq, it's the eighth week of gains out of the past nine. as for today, the energy sector was the biggest drag on the market. this energy exchange traded fund shed a little more than one percent on the back of weaker oil prices today. but the volatility within the sector was with coal stocks. peabody energy fell 6.5%. alpha natural resources was down almost 6%. and consol energy shed almost 4%. here's the up and down with oil this week. prices cooled a tad today, dropping below $107 per barrel. this recent rally has stalled out around $110 per barrel so far. we learned a little more about sara lee's plan to split up its company. it will spin off its coffee and tea business with shares that will trade on the amsterdam stock exchange. that news helped its big board listed shares, rising more than 7%. volume jumped five fold with the
stock rising to a new 52-week high. this is part of its plan to split into two publicly traded companies. speaking of food, we mentioned the initial public offering of online restaurant review site yelp. it got high marks in its first day of trading. it's initial price was $15 and surged more than 60%. but even with that, it's the third best debut this year. with gasoline prices on the rise, it's common to see shoppers looking to discount retailers as a way to save money. big lots is not looking for more business this quarter. earnings last quarter were two cents per share stronger than expected. sales were also stronger than expected. but shares fell four percent thanks to a disappointing outlook for this quarter. last year the company was the target of private equity buyouts, helping boost its share price, before today's disappointment. the online photo-giant kodak continues looking for ways to raise money. today it agreed to sell its online photo services business to competitor shutterfly. eastman kodak remains a penny
stock, trading well below a dollar per share. it no longer trades on the new york stock exchange as its in bankruptcy protection. southerfly rallied strong, up 16 and a half. volume was seven times normal as its buyout will add to its customers while getting rid of a big competitor at the same time. some confusion around casino wynn resorts today. the company said it made a mistake when it filed a regulatory disclosure about a land deal in macau, china. the filing indicated it was working on a deal for a new casino in china. the stock even halted for a time. but then the company said it was a mistake. after trading again, shares jumped 4% by the closing bell. it traded higher but still finished with a decent gain with traders now thinking some deal may be in the works. and that's tonight's market focus. >> general motors will unplug production on the volt electric car for five weeks and hopes to reduce inventory. and that's tonight's market
watch. >> susie: settlement talks continue in the lawsuit against b.p. for the gulf oil spill. the trial was delayed for those talks and is now set to begin on monday in new orleans. the british oil giant is trying to settle with a group representing property owners, fishermen, hotel and restaurant operators who say their livelihoods were damaged by the deepwater horizon explosion and oil spill in 2010. tulane law professor ed sherman believes there could be a deal in the works. >> the facts are not particularly good for them to do to trial. they can expect to have substantial damages awarded against them and therefore clearing up the uncertainty that a trial and possible appeals
would have by settling ought to be a fairly strong motivation. >> susie: the settlement talks don't cover fines by the federal government suits by the states impacted or claims between b.p. and its partner companies on the deepwater horizon rig. >> tom: credit the federal reserve for higher stock prices. that's how tonight's market monitor describes the recent market rally. mark leibovit is chief market strategist at vrgoldletter.com. >> back with us tonight from phoenix. welcome back. always great to see you. >> same here, tom. thanks for having me. >> tom: engineered by the federal reserve or not, what about the recently encouraging economic data we've basketball seeing if what's your sense of the economy? >> my sense is not as optimistic. i don't believe the figure that is we've been getting from the government. there's a lot of talk about employment numbers. we know those have been doctored up, and the fed has been engineering the rally. even chairman bernanke targeted a higher stock
market. the printeding presses are running 24/7, tom, and even though there's not official qe 3, the fed has been helping bail out europe. it's in the hope that stocks go higher and people get employed. >> tom: why do you say the numbers are doctorsed? >> because of the way they calculated the employment, unemployment numbers. they exclude people that stop looking for work, when years ago they didn't do that. we're not really getting a true picture of what's going on out there, and the average person on the street zoo-i talk to a lot of people -- the economy isn't what it is. the stock market is an illusion. it doesn't mean we can't make money. >> tom: prices are prices. stocks are higher. you're looking at the charts and the traditional trading patterns for the dow jones industrial average. first how the average year
plays out for the dow. a spring s&l owl, summer, and then a drop in the rally through the year, but things are different in an election year. what are the key differences? >> this is a seasonal study based on the presidential cycle. you get a pullback in march, and be careful. it could rally longer than the bears want, into april, and 99 nosedive for a couple of months and then have a big rally into september. either way, we're in a period where you have to look for a little bit of a correction. we'll know in a few days whether we're following the traditional or the presidential pattern, tom. but overall, if you look at the model. they're bullish because of the presidential year and because we follow a rally into the end of the year anyway. >> tom: a couple of places where you're looking to make mon sesmith and wesson.
swh. it had a niceeral fre3 to $5. where do you see it going? >> minimum target is 7. but i could see it in the 10 on 12 area in the next six to 12 months. there's a big interest in guns and protection, ammunition sales are up. i'm not advocating it. just telling you what the charts are saying and smith and wesson is a low price stock. >> tom: you also like silver here. i don't want to make a doomsday scenario. but you like guns and metal. we're looking at silver, and it's just above a 40 week moving average. why is this an important point? >> it's a big support area. we just rallied above it, and hopefully will stay above it. it has been tracking with it, and the longer -- gold has done the same thing, tom. it's a critical area for t and we also have an inverse head and shoulders pattern projecting into the 40s.
between those two, and the fact that technically we're getting volume to the upside, and the technical shake the last couple of days. my technical work says higher prices here. i'm very bullish on the numbers in terms of where i think we're going. i think we're going a lot higher. >> tom: update a pick on october 2nd. you liked gold at 1600, and you called it bargain basement. would you buy more at 1700? >> absolutely. when you're going to 2500. 3,000, 5,000, and maybe 11,000 in the next five to six years, any pullback is a buy sx.d silver is triple digits. >> tom: do you own anything we mentioned? >> i own and trade all of them, absolutely. >> tom: the friday marketed mon toerp. the v.r. gold letter pntd com.c. >> susie: let's take a look at what's coming up next week. it'll be a busy one. we'll be in houston where the heads of the nation's biggest energy companies are gathering to talk u.s. energy policy.
also from houston, a verdict is expected in the trial of alleged ponzi schemer allen stanford. apple plans to roll out the ipad 3. we'll see what it does for the company's red hot stock. and friday, the latest jobs report comes out. economists believe american businesses added 243,000 jobs in february. >> susie: and finally tonight, our friday feature "lou's been thinking." here's author and educator lou heckler. >> i've been thinking about gatherers versus distributors. i know mostly we hear about men being hunters and women being gatherers. but i know a lot of men who are gatherers, too: they gather the latest electronic gadgets, the trendiest kitchen counters, the vroom-iest sports car. the main thing is: they seem to want to get them before the rest of us do. i'm more partial to distributors. these men and woman love to learn new ideas, too, but as soon as they do, their first question is, who else would love to know this? distributors feel if something
is intriguing or curious. they can't wait to share it with others. they send you emails that are not corny jokes or direct you to online articles you may have missed. they're not looking for something in return, they just like sharing. as they get older, these are the folks who volunteer at schools and places of worship and community outreach groups. they help raise money, raise awareness, raise spirits. so, what's their payoff? it's the look on our faces when we not only discover something we didn't know, but also discover that in this often me- first world, someone else was actually think of us, too. so, if you're typically a bit of a gatherer, how about distributing the wealth of an idea instead? >> tom: that's "nightly business report" for friday march 2. i'm tom hudson. goodnight everyone and have a great weekend. you, too, susie. >> susie: good night, tom, and have a great weekend. i'm susie gharib we hope to see all of you again next week.